Implementing the DSRIP
Finance Function
DSRIP Support Team
February 27, 2015
February 2015
2
Contents
• Developing the DSRIP Finance Function
• Defining The Vision
• Responsibilities/Structural Considerations
• Meeting the Needs of Key Stakeholders
• Major Risks to Implementation
• Funds Flow Plan
•
•
•
•
•
•
•
Defining the Funds Flow Plan – Guiding Principles
Review of Starting Points
DSRIP Payment and Reporting Calendar
Allocation of Expected Year 1 Payment
Budget and Funds Flow Plan – Process Overview and Drivers
Budget and Funds Flow Plan – Bonus Requirements Example
Next Steps
• Panel Discussion
February 2015
3
DSRIP Finance Function – Defining The Vision
The Finance Function will play a vital role in helping the PPS realize its DSRIP goals and objectives.
It serves a critical role in
the overall success of the
DSRIP program
The Finance Function
plays a Value Added Role
to any business
Aligning its strategy and vision
with that of the business
 Provides timely and accurate
financial and operating
information needed to
 Monitor performance and make
sound decisions
Understanding the complexities of
the financial aspects of DSRIP
 Helps in obtaining buy-in from the
network providers


DSRIP
Finance
Function
Along with the PPS Lead,
the Finance Committee
provides the leadership
and vision
The Finance Committee
provides essential support
and oversight
Helps ensure that it is properly
administered and controlled
 Must be anchored in the PPS’s
Governance structure and
process

In defining and implementing the 5
Year DSRIP strategies, while
 Maintaining the strengths of the
delivery network under expanding
value based strategies.

February 2015
4
DSRIP Finance Function – Defining The Vision
• Design and administration the funds flow plan is one of the most critical
responsibilities.
 Need to get it right from the start
 Drives implementation funding, as well as incents appropriate behaviors
• Assessing/maintaining the financial stability of the network is equally vital.
 Ability of providers to maintain sustainable delivery models through the challenges of DSRIP, and
 Transition to value based payments
• The PPS Lead is expected to have administrative and operational responsibility,
including:
 Finance related functions of the PPS, and
 Ensuring that the PPS meets its DSRIP reporting requirements and timelines.
• The vision of the PPS Lead must extend beyond analytics to:
 Understand and administer the requirements of DSRIP and
 Guide the PPS through the complexities of payment reform
February 2015
5
Finance Function Responsibilities
The following Finance Function responsibilities are essential to the success of the PPS.
Finance Function Responsibilities
• Defining the Role and Responsibilities of the PPS Lead
 A PPS must define its overall Governance structure and Roles and Responsibilities of the PPS Lead
 Essential for DSRIP participants who are dependent upon a strong Finance function within the PPS
• Establishing the DSRIP Finance / Business Office
 Create separate DSRIP General Ledger and Define / Implement the Accounting, Banking, Accounts Payable
Functions
 Compliance Plan must be developed by and for the PPS Lead function(s)
 Integrate Business Office functions with other workstreams as the overall PPS implementation
• Establishing Relationship and Coordination Process with Key Stakeholders
 Create and Distribute PPS network Communication Plan
• Developing and Executing the PPS and Provider Operating Agreement(s)
February 2015
6
Finance Function Responsibilities
Further Finance Function responsibilities include:
Finance Function Responsibilities
•
Complete the Funds Flow Plan and Distribution Model
 Build and Distribute a Simulated Funds Flow Model
 Transparency is important for all PPS Partner providers
 Incentivize support for project execution and to gain their trust and commitment
• Define and Implement a Process to Monitor PPS Financial Stability
• Establish PPS Risk Management Workgroup and Initiate Design of the Value Based Plan
• Define and Implement the Data Analytics Process with IT workstream
• Identify Data Sources for the DSRIP Milestone and Metric reporting requirements
 Design processes and enabling technologies to capture and report needed data
• Develop a DSRIP Calendar with milestones and dates that includes schedules for inbound reports from providers,
outbound reporting to DOH and providers, communication from the Lead and funds flow
February 2015
7
Finance Function Responsibilities
Further Finance Function responsibilities include:
Finance Function Responsibilities
• Application Requirements and Submission of Capital Restructuring Financing Program (CRFP) Grants
• Develop Reporting Requirements (Internal & External)
 Essential to meeting the DSRIP requirements and to maintain transparency in the management of funds
 Plan and Report on Domain 1 Process Milestones and reporting requirements
 Data for Domain 2 & 3 reporting
February 2015
8
Finance Function – Structural Considerations
Develop the Finance Function through leveraging existing partner infrastructure where capacity permits.
PPS Finance Committee
Compliance/Audit
DSRIP Business Office
• Finance Business Partnering
• Provider Partner Controllership
Financial & Operational
Reporting
Procurement and Payables
Decision Support
• Quarterly to DOH/CMS
• Purchasing
• Financial
• Funds Flow
• Disbursements
• Data and Analytics
• Ad Hoc Quality and Operational
• Sourcing
• Partner/Stakeholder
Treasury
• Cash and Banking Management
• Funds Distribution
Management
• Investment Management
Other Functions Reporting
to Finance
• Contracting
• Risk Based Analytics
• Internal Audit
• IT
Prospective Finance Function Resource Needs:
•Director of Finance (Accounting)
•Financial Analyst
•Accounts Payable
•Accounting Manager
•Reporting Analyst
•DSRIP Banking Function
February 2015
Meeting the Reporting Needs of Key Stakeholders
To be successful, key stakeholders should be engaged throughout the DSRIP lifecycle. These
stakeholders, internal and external, must be identified in the implementation plan.
• Governance process members, committees, and other participants
• DSRIP Operational and Project Teams
• PPS Network Partners and their Finance related functions
• Managed Care Organizations engaged for value based reform strategies
Regular and appropriate communication with each of these stakeholders is essential to ensure that
each understands the overlap of their role and function with Finance, the dependencies on each, and
how each can expect Finance to interact with them.
• This is also a critical factor in establishing trust and commitment from each of the PPS Provider partners.
• It is important to identify which partners can potentially hamper workstream or project progress if they are not
contacted or looped into PPS decisions.
9
February 2015
10
Key Stakeholders
Key Financial Workstream Stakeholders
include, but are not limited to:
PPS DSRIP Project Director
Provider
PMO
Relationship
Team
Project Leads/Managers
Compliance Team/Committee
Audit Functions
Finance Committee
Provider Led
Human Resources
CFO/Finance
IT
Provider Led CFO/Finance Team
• Funds Flow Transparency
IT
• Reporting Requirements
• A/P Function
• Existing Provider Relationship Team
• Existing Provider Boards
Provider
Boards
PPS DSRIP
Project
Director
PMO
•
•
•
•
•
•
•
•
•
Project
Leads
Compliance
Team
Audit
Functions
Human
Resources
Finance
Committee
•
•
•
•
•
•
•
•
Stakeholders
and
Influencers
Medicaid
Members
Community
Social Services
County Services
Outreach Centers
MCOs / Payers
DOH
Other Regulatory
February 2015
11
Major Risks to Implementation
There are challenges and risks to the successful implementation and performance of
the Finance Function. Potential Risks include, but are not limited to:
Major Risks to Implementation
• PPS Leads do not clearly understand their roles; requirements are not fully and clearly defined.
• PPS providers are not compliant with PPS provider agreements and reporting requirements.
• Potential changes in the DSRIP rules and requirements.
• Lack of collaboration among PPS participants, Project Directors and Project Leads.
• Participants may not acknowledge PPS Lead role and “authority” to manage the Projects and funds distribution.
• Inability to access data to perform or validate analytics related to project performance.
• Lack of communication with, and education of, the PPS provider partners and their Finance departments
regarding the funds flow process and related reporting requirements.
• Lack of effective financial controls in place for funds flow, reporting, and other financial functions.
Funds Flow Plan
February 2015
13
Defining the Funds Flow Plan – Guiding Principles
• An effective funds flow plan will help enable the PPS to
accomplish the following:
• Ensure Financial Sustainability of the PPS
• Incentivize and Fund change
Financial
Sustainability
• Reward Performance and Incent Behavior
• Establish architecture for payment reform models
• Buy-in of the funds plan by the providers is a key factor in the
PPS’s ability to achieve the DSRIP goal.
Incentivize
and Fund
Change
Reward
Performance
Architecture
For Payment
Reform
• Designing an effective funds flow plan requires an understanding
of the requirements and impacts of the projects.
• Incentive metrics should be clearly defined and aligned with
factors that affect the PPSs DSRIP payments.
February 2015
14
DSRIP Funds Flow – Review of Starting Points
Review of Funds Flow Starting Points
•
Funds Flow is arguably one of the most critical aspects of the functioning of the PPS to get right from the start
•
During DY1-5, the PPS will receive payments from DOH based upon the PPS’ performance in achieving the
measurable goals of the DSRIP projects.
•
The PPS must establish a funds flow plan that specifies how the DSRIP funds received will be distributed among
the participating providers in the PPS.
•
The PPS will be required to issue scheduled reports to the DOH on the actual distribution of DSRIP payments by
provider and project that also identifies the basis for the distribution.
•
Governance structure and operating agreement determines approach to funds distribution, considering positive
as well as under-performance situations.
•
Budgets should consider the maximum value as a parameter but provide for the potential that the PPS will not
achieve 100% for all projects in all years.
•
Transparency in funds flow mechanics, analytics and communications is critical to developing trust.
The PPS Lead is responsible for the administration and oversight of the funds flow plan.
Requires implementation of a robust and visible finance function to be effective.
February 2015
15
DSRIP Funds – Distribution By Category and Year
•
To set the initial estimate of the PPS budget, the annual funding of the MAV is allocated to each category.
•
The budget process will consider provider specific impacts and input into the final plan and could result in
revisions to the allocation method. The final model would be approved by the Executive Body.
 The MAV estimate can be revised
based on final attribution results and
the updated PMPM benchmarks.
 Allocation per budget category
should vary each year over the 5yr
period based upon implementation
schedule, anticipated impacts, and
expected performance.
 Contingency and Other categories
provide reserves that can be held as
Undistributed Revenue for
unexpected costs or needed support.
Provider specific funds flow plan will define the basis for distribution of actual payments.
February 2015
16
DSRIP Payment and Reporting Calendar
Domain 1
 Assess Implementation
across all Domains
 Quarterly Reporting
 IP Process Updates
 AV scoring
 Semi-Annual Reporting
• Organizational
• Project Specific
• Speed & Scale
• Workforce
• System Integration
Domain 2
Domain 3
 System Transformation
• Assessed Statewide
 Annual and Semi-Annual
Measures and Reporting
• NY DOH
• PPS
 P4R in DY 1 & 2
 Clinical Improvement
• 3.A applies to All
• Others by Project
 Annual and Semi-Annual
Measures and Reporting
 P4R in DY 1
 P4P in DY 4 & 5
28% of Payments
28% of Payments




Domain 4
Population Management
Strategy Specific
P4R in all DY
Majority is Annual Report
5% of Payments
Number of
of annual
annual measures
measures may
may affect
affect timing
timing of
of payments
payments for
for the
the DY
DY
Number
39% of Payments
Semi-Annual Measurement and Reporting of Domain Measures Drives the Payment Process
February 2015
17
DSRIP Payment and Reporting Calendar
Reporting
to DOH
April 1, 2015
Implementation Plan Due
July 31, 2015
1st Quarterly Report Due
Semi-Annual Report Due
June 30, 2015
Quarterly Period End
Semi-Annual Period End
January 31, 2016
3rd Quarterly Report Due
Semi-Annual Report Due
October 31, 2015
2nd Quarterly Report Due
Dec. 31, 2015
Quarterly Period End
Semi-Annual Period End
Sept. 30, 2015
Quarterly Period End
2015
April 30, 2016
4th Quarterly Report Due
March 31, 2016
Quarterly Period End
2016
April
DY0
May
June
July
August
Sept.
DY1
Oct.
Nov.
Dec.
Jan.
Feb.
March
April
DY2
Mid-April, 2015
1st DSRIP Y1 Payment
Payments Issued to PPSs
Aug / Sept, 2015
Estimated 2nd DSRIP Y1
Payment
Feb./ Mar 2016
Estimated Final DSRIP Y1
Payment
2016 Forward – 2 DSRIP Payments Per Year
Quarterly / Semi-Annual Reports
Source: https://www.health.ny.gov/health_care/medicaid/redesign/docs/program_funding_and_mechanics.pdf
February 2015
18
DSRIP Payments are Variable Over Time
•
DSRIP payments will be calculated initially based on the progress of process milestones/metrics but will
progressively transition to higher amounts being allocated for meeting project outcomes.
•
Initially payments are based upon progress – including meeting scale and speed targets and other Domain 1
metrics. Domain 1 payments represent 39% of total payments.
•
DOH will issue three DSRIP payments to distribute the CY 2015 funds. Two payments in each subsequent year.
Dependence upon meeting outcome metrics increases
2015
$6,892,451
$13,784,903
April
May
June
July
August
Sept.
Payment Split shown as Example Only.
Basis for Pmt 2 and Pmt3 split are TBD
Oct.
Nov.
Dec.
2016
Jan.
$13,784,903
Feb.
March
April
February 2015
19
DSRIP Funds – Allocation of Expected Year 1 Payment
•
Once received by the Lead, the payment for CY 2015 (DY1) would be distributed according to the funds flow
plan. If not yet final, a preliminary funds flow plan should be developed to guide this initial distribution.
 The Funds Flow plan provides the
framework for the distribution of funds
to the PPS providers.
 Project Implementation costs are
expected to be funded as part of each
of the payments received.
 Undistributed Revenue includes
amounts not yet allocated for funding
from the payment(s) received to-date.
Payment to Providers 30 days after funds are received from DOH. The process might include:
- Report of payment received and distribution plan to Executive Body for Approval.
- Communication to providers should include Expected Distribution Report
February 2015
20
Budget and Funds Flow Plan
• Developing a DSRIP budget and funds flow plan is an engaging process that requires communication
between the DSRIP project teams, DSRIP finance function, and PPS network providers.
• The PPS provider network should be involved in developing the funds flow methodology.
 Understanding of the Funds
Flow process – how
payments will be received
 Understanding of project
implementation and
resource requirements
 Impact of DSRIP projects on
PPS providers
 Funds Flow Plan provides
framework for distribution of
actual payments
 The Funds Flow budget and
plan will define requirements
of providers and PPS
PPS Applications Approved
and Scored
Maximum Application
Valuation Determined
PPS Budget and
Funds Plan
Budget Plan Review
Process
Providers prepare DSRIP
budgets
Projects Selected By PPS
and Provider Partners
Final Budget
and Funds Plan
February 2015
21
Actual Payment Received From DOH
• The Funds Flow Budget and Distribution Plan establishes the framework for determining the
distribution of actual payments received to the PPS providers.
• Payment to providers is based upon factors defined in the distribution plan, the provider’s
measurement against those factors, and the actual amount of the payment received from DOH.
DSRIP Reporting to DOH
Reviewed and Valued
Actual DSRIP Payment
Remitted to PPS Lead
Final Budget
and Funds Plan
Determination of Funds to
be Distributed
DSRIP
Payments
Issued
 This can be an iterative process
to evaluate actual to budget
payments and decisions re:
future needs to set aside
reserve funds.
 Hierarchy of Distribution
• Fixed Costs
• Reserves
• Unexpected items
• Distribution based on Plan
 Undistributed and Reserve Funds
can be distributed at any time.
 Finance Committee should
approve distribution.
February 2015
22
Budget and Funds Plan – Funding Considerations and Drivers
• The PPS Operating Agreement with the providers should clearly define the Provider responsibilities
 Project Implementation and Performance
 Timely and accurate reporting including financial sustainability assessment and project reporting across all
Domains where data is required from the PPS
 Funds Flow Plan Term Sheet is used to define Provider Responsibilities and specific performance
requirements.
• Develop a PPS Level Funding Requirements Matrix
 What is required to receive the full payment for each Domain level for reporting and performance of the PPSs
selected projects?
 What data and results must be reported by the PPS vs. data provided or accessed by DOH?
 This matrix would become the basis for the Provider Level Term Sheet – with items specified and defined as
applicable.
• Develop a Project Responsibilities Chart (PPS Level) and a Provider Responsibilities Chart
 Each DSRIP Project has specific requirements and metrics to measure progress and achievement.
 The chart(s) will define the specific roles and responsibilities of the PPS and the Provider related to each project.
 These responsibilities and deliverables will provide the basis for the provider to qualify for Incentive / Bonus payments.
February 2015
23
Budget and Funds Flow Plan – Bonus Requirements Example
• The Forestland Health Provider Partnership (FHPP) PPS has developed their Provider Operating
Agreements to be executed by all PPS Provider Partners. The criteria defined in the Agreement for
their providers to receive DSRIP bonus payments includes the following:
General requirements to receive any DSRIP payments:
 Execute the PPS Partner Agreement.
 Submit prescribed reports and data to PPS timely.
 Utilize PPS prescribed templates for data collection
and submission to PPS.
 Participate in surveys administered by the PPS, by
DOH or other DSRIP administrative body.
 Meet required attendance metric for PPS scheduled
meetings and workgroups.
 PPS Partner Agreement states that provider shall be
eligible to receive DSRIP bonus payments when they
meet or perform all of their project related
responsibilities.
Requirements to receive DSRIP bonus payments:
 Submit the completed Domain 1 project template to
PPS by the 10th day following quarter end.




Workforce strategy updates
Documentation of number of beneficiaries served in projects
Participation in Learning Collaboratives
Other Domain 1 items as may be required by DOH.
 Meet all of the provider’s project responsibilities
defined in the Provider Project Responsibility Matrix.
Submit status update documenting status by the 10th
day following quarter end.
 Meet or exceed the outcome milestones applicable
to the provider’s projects as defined and submit data
for those identified in the matrix as PPS responsible.
The amount of the actual bonus payment will be based upon the provider’s percentage of the PPS’s
overall achieved milestones or metrics and the number of attributed members served by the projects.
February 2015
24
Funds Flow Next Steps
Funds Flow Next Steps
• Establish the DSRIP Finance Function
• Banking and other Structure Required
• Re-verify Alignment of Funds Flow Model and
Approach with the PPS Objectives and Strategies
• Collaboration with Project Teams
• Understand project requirements
• Understand costs and impact
• Finalize Framework for Funds Flow Process
• PPS Lead Process
• Provider Strategies and Incentives
• Implementation Plan
• Finalize financial stability assessments
• Funds flow plan
• Develop and Distribute Budget Forms and
Process to PPS Providers
• Communication with Providers
• Overview of plan and process
• Understand Reporting and Payment Process
• Communicate Requirements to providers
• Detail in Operating Agreements
• Identify Data Sources for DSRIP reporting
• Develop workplan to capture and report
• Connect to enabling technology
• DSRIP Financial Calendar
• PPS Lead Communication Plan
February 2015
25
Panel Discussion
• Participants:
• Todd Gorlewski, Senior Vice President and CFO, SBH Health System
• Matt Drake, Director of Finance/Population Health Management and Business Planning,
Rochester Regional Health System
• Kelvin Drawdy, Consultant, KPMG
• Moderator:
• Joe Kuehn, Partner, KPMG
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Questions
Contact Information:
Joseph F. Kuehn, Jr.
Partner
KPMG LLP
Management Consulting – Healthcare
(631) 425-6021
[email protected]